x
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the fiscal year ended December 31, 2009
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|
OR
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|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
371172197
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|
(State
or other jurisdiction of
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(I.R.S.
Employer Identification Number)
|
|
incorporation
or organization)
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63005
|
||
(Address
of principal executive offices)
|
(Zip
Code)
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(636) 537-9715
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Registrant’s
telephone number, including area
code
|
Title of Each Class
|
Name of Each Exchange on Which
Registered
|
|
Common
Stock, par value $0.001
|
NASDAQ
Global Select
Market
|
Document
|
Part of Form 10-K into Which
Document Is Incorporated
|
|
Sections
of the registrant’s definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on May 20, 2010, which is expected to be filed no
later than 120 days after December 31, 2009
|
Part
III
|
Part
I
|
||||
Item
No. 1
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Business
|
1 | ||
Item
No. 2
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Properties
|
17 | ||
Item
No. 3
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Legal
Proceedings
|
17 | ||
Item
No. 4
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(Removed
and Reserved)
|
17 | ||
Part
II
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||||
Item
No. 5
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Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
17 | ||
Item
No. 7
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
18 | ||
Item
No. 8
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Financial
Statements and Supplementary Data
|
26 | ||
Item
No. 9
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
26 | ||
Item
No. 9A(T)
|
Controls
and Procedures
|
26 | ||
Item
No. 9B
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Other
Information
|
27 | ||
Part
III
|
||||
Item
No. 10
|
Directors
and Executive Officers of the Registrant
|
27 | ||
Item
No. 11
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Executive
Compensation
|
27 | ||
Item
No. 12
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
27 | ||
Item
No. 13
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Certain
Relationships and Related Transactions
|
27 | ||
Item
No. 14
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Principal
Accounting Fees and Services
|
27 | ||
Part
IV
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||||
Item
No. 15
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Exhibits
and Financial Statement Schedules
|
27 |
|
•
|
Reliv
Classic and Reliv NOW — two basic nutritional supplements containing
a full and balanced blend of vitamins, minerals, proteins and
herbs
|
|
•
|
Innergize! —
an isotonic sports supplement in three
flavors
|
|
•
|
FibRestore —
a high-fiber and antioxidant
supplement
|
|
·
|
Aging Population: The
older population (persons 65 years or older) numbered 38.9 million in 2008
according to the Department of Health and Human Services. They
represented 12.8% of the U.S. population, about one in every eight
Americans. By 2030, there will be about 71.5 million older persons living
in the U.S., more than twice their number in 2000. People 65 years or
older represented 12.4% of the population in the year 2000 and are
expected to represent 20% of the population by 2030. We believe
this ever-growing population will continue to focus on their nutritional
needs as they age.
|
|
·
|
Rising Healthcare Costs and
Use of Preventative Maintenance: The costs of healthcare in the
United States continue to increase rapidly each year. National
health care spending reached $2.5 trillion in 2009 and is expected to
reach $4.4 trillion by 2018 according to the National Coalition on Health
Care, or NCHC. The NCHC also indicated in a recent report that nearly
seven million Americans will lose their health insurance coverage between
2008 and 2010 and The Urban Institute estimates that under a worse case
scenario, 66 million Americans will be uninsured by 2019. In addition, the
total 2009 medical costs for a typical American family of four topped out
at $16,771 which is a 7.4% increase from 2008 according to the Milliman
Medical Index. In order to maintain quality of life as well as
reduce medical costs, many consumers take preventative measures to improve
their general health, including the use of nutritional
supplements.
|
|
·
|
Increasing Focus on Weight
Management: A 2008 study conducted by the Johns Hopkins Bloomberg
School of Public Health showed that by 2030, 86% of Americans could be
overweight or obese and the health care costs attributed to obesity are
expected to more than double every decade. Being overweight can lead to
more serious health concerns such as diabetes, heart disease and other
chronic illnesses and individuals who are obese have a 10% to 50%
increased risk of death from all causes, compared with healthy weight
individuals. Bearing these facts in mind, we believe that there will be an
increased need not only for weight loss products but for wellness products
as well.
|
Product Category
|
Product Name
|
% of 2009
Net Sales(1)
|
Year
Introduced
|
||||
Basic
Nutrition
|
Reliv
Classic
|
18.7 |
1988
|
||||
Reliv
NOW
|
11.2 |
1988
|
|||||
NOW
for Kids
|
3.6 |
2000
|
|||||
Reliv
Delight
|
0.3 |
2001
|
|||||
Specific
Wellness
|
FibRestore
|
13.3 |
1993
|
||||
Arthaffect
|
7.0 |
1996
|
|||||
ReversAge
|
4.3 |
2000
|
|||||
SoySentials
|
2.4 |
1998
|
|||||
CardioSentials
|
2.1 |
2005
|
|||||
GlucAffect
|
4.0 |
2008
|
|||||
Weight
Management(2)
|
Slimplicity
Meal Replacement
|
2.1 |
2007
|
||||
Slimplicity
Accelerator Capsule
|
0.9 |
2007
|
|||||
Reliv
Ultrim Plus
|
0.2 |
1988
|
|||||
Cellebrate
|
0.7 |
1995
|
|||||
Sports
Nutrition
|
Innergize!
|
11.0 |
1991
|
||||
ProVantage
|
3.1 |
1997
|
|||||
Relivables(3)
|
Skin
Care
|
1.1 |
2001
|
||||
Food
Products
|
0.1 |
2009
|
(1)
|
This
table does not include net sales for the year ended December 31, 2009
related to freight and handling and sales of marketing materials, which
represented approximately 13.9% of net sales for the year ended
December 31, 2009.
|
(2)
|
Since
its introduction in February 2007, our Slimplicity Meal Replacement
formula has replaced Reliv Ultrim-Plus in all but our Canadian and Mexican
markets. Upon introduction of our Slimplicity products in a particular
market, our Reliv Ultrim-Plus line was discontinued in that
market.
|
(3)
|
In
August 2009, we introduced our Relivables line of skin care and food
products. The Relivables skin care products include science-based updates
to our original ReversAge skin care products. In conjunction
with these updates, we have re-branded our skin care products under the
Relivables lines.
|
•
|
Reliv
Classic is a nutritional supplement containing a variety of vitamins and
minerals, soy and other protein sources and various herbs. It is a
vegetarian product that contains no animal compounds, artificial
preservatives, artificial flavors or added simple sugars. Reliv Classic is
available in the United States, Australia, New Zealand, Canada, Germany,
Austria, the Netherlands, the United Kingdom, Ireland, Malaysia,
Singapore, Brunei and the
Philippines.
|
•
|
Reliv
NOW is a nutritional supplement containing a variety of vitamins and
minerals, soy and other protein sources and various herbs. Reliv NOW is
available in every country where we operate except
Indonesia.
|
•
|
NOW
for Kids is a product designed to provide a balanced nutritional
supplement for a child’s diet and contains a variety of vitamins and
minerals. NOW for Kids is available in Australia, New Zealand, United
States, the United Kingdom, Ireland, Austria, the Netherlands, Mexico,
Malaysia, Brunei, Indonesia and the
Philippines.
|
•
|
Reliv
Delight is a powdered nutritional supplement marketed as a milk
replacement. Reliv Delight is available in Mexico and the United
States.
|
•
|
ReversAge
is a patented youth-promoting nutritional supplement designed to slow down
the effects of the aging process. Three proprietary complexes form the
foundation of the supplement: longevity complex, antioxidant complex and
herbal complex. The longevity complex is restorative and designed to
replenish key hormones while creating balance within the body’s major
systems; the antioxidant complex is designed to slow aging at the cellular
level and the herbal complex delivers a variety of herbs, including Ginkgo
Biloba and Maca. ReversAge is available in every country where we operate
except Germany, the United Kingdom, Ireland, and Indonesia. In Canada, the
product is marketed as
Nutriversal.
|
•
|
SoySentials
is a nutritional supplement containing soy as well as other vitamins,
minerals and herbs designed for use by women. SoySentials provides a woman
with key nutrients targeted to promote women’s health and ease the
symptoms of menopause and PMS. SoySentials is available in the United
States and Mexico.
|
•
|
CardioSentials
is a berry-flavored nutritional supplement introduced in February 2005
that promotes heart health. The product contains 1,500 mg of
phytosterols per serving, policosanol and several powerful antioxidants.
In a clinical study of this product, participants experienced meaningful
reductions in cholesterol as well as improvement in their high-density
lipoprotein, or HDL, and low-density lipoprotein, or LDL, ratios. We have
applied for a U.S. patent on CardioSentials. CardioSentials is
available only in the United
States.
|
•
|
Arthaffect
is a patented nutritional supplement containing Arthred, a patented form
of hydrolyzed collagen protein, which is clinically reported to support
healthy joint function. The product is available in the United States,
Australia, New Zealand, Mexico, the Philippines, Malaysia, Singapore,
Brunei and Canada. The product is marketed as A-Affect in Australia, New
Zealand and Canada due to local product
regulations.
|
•
|
FibRestore
is a patented nutritional supplement containing fiber, vitamins, minerals
and herbs. A modified version of the FibRestore formula is marketed in
Canada under the name Herbal Harmony to comply with Canada’s nutritional
regulations. FibRestore is available in all of the countries in which we
operate except Indonesia.
|
•
|
GlucAffect
is a cinnamon cream flavored nutritional supplement launched in November
2008 as our latest product offering. GlucAffect contains Pycnogenol®
and other clinically supported active ingredients. GlucAffect has been
clinically proven to assist in healthy blood sugar management and support
weight loss. We have applied for a U.S. patent on
GlucAffect. GlucAffect is available in theUnited
States, Canada, the Philippines, Malaysia, Singapore and
Brunei.
|
•
|
Our
Slimplicity Weight Loss System was introduced in the United States in
February 2007 and includes two products: (1) Slimplicity meal
replacement and (2) Slimplicity accelerator capsules. Our
Slimplicity Weight Loss System incorporates these new products into an
overall program that includes proper diet and exercise and is focused on
facilitating weight loss and developing healthier lifestyle choices.
Slimplicity is currently available in the United States, Germany, Austria,
the Netherlands, Ireland, the United Kingdom, Australia, New Zealand, the
Philippines, Malaysia, Singapore and Brunei. In our European
markets, we offer chewable tablets instead of capsules in light of local
preferences and formula modifications required to comply with product
regulations. In Australia and New Zealand, the products are marketed
as Slimsimply due to trademark
availability.
|
•
|
Reliv
Ultrim-Plus is designed as a meal replacement (for a maximum of two meals
per day) for use in a weight loss program. Reliv Ultrim-Plus is only
sold in Canada and Mexico. Reliv Ultrim-Plus is no longer available
in our other markets due to the introduction of our Slimplicity meal
replacement product. We expect Slimplicity to eventually replace
Reliv Ultrim-Plus in all of our
markets.
|
•
|
Cellebrate
is a patented weight loss aid designed to suppress appetite, curb the
storage of body fat, and facilitate the body’s fat burning process.
Cellebrate is available in the United States and Canada.
|
|
•
|
Innergize!
is a patented sports supplement, containing vitamins and minerals designed
for performance enhancement. Innergize! is available in every country
where we operate. In Canada, the product is marketed as Optain due to
local product regulations.
|
|
•
|
ProVantage
is a nutritional supplement containing soy designed to enhance athletic
performance with a balance of nutrients needed to improve endurance,
muscle recovery and repair. ProVantage is designed to increase muscle
recovery, muscle mass and function, reduce fatigue and burn excess body
fat for extra energy. The product also benefits dieters and others seeking
to increase their soy intake. We have applied for a U.S. patent on
ProVantage. ProVantage is available in the United States and
Canada.
|
Designation
|
Discount
|
|||
Retail
Distributor
|
20 | % | ||
Affiliate
|
25 | % | ||
Key
Affiliate
|
30 | % | ||
Senior
Affiliate
|
35 | % | ||
Master
Affiliate
|
40 | %(1) | ||
Director
|
40 | %(1) | ||
Key
Director
|
40 | %(1) | ||
Senior
Director
|
40 | %(1) | ||
Master
Director
|
40 | %(1) | ||
Presidential
Director
|
40 | %(1) |
(1)
|
In
addition to discounts, these levels also receive commissions based on
sales in their downline
organization.
|
|
•
|
During
2009, we sponsored approximately 59 training schools on a quarterly basis
across all of our markets for new Master
Affiliates;
|
|
•
|
For
each market in which we operate, we sponsor an annual conference for
distributors; and
|
|
•
|
In
the United States, we sponsor an annual International Conference in summer
for all worldwide distributors and a winter conference for U.S.
distributors.
|
Country
|
Year Entered
|
|
United
States
|
1988
|
|
Australia
|
1991
|
|
New
Zealand
|
1992
|
|
Canada
|
1992
|
|
Mexico
|
1993
|
|
United
Kingdom(1)
|
1995
|
|
Philippines
|
2000
|
|
Malaysia
|
2003
|
|
Ireland
|
2003
|
|
Singapore
|
2004
|
|
Germany
|
2005
|
|
Austria
|
2006
|
|
Netherlands
|
2006
|
|
Brunei
|
2009
|
|
Indonesia
|
2009
|
(1)
|
Includes
Great Britain, Scotland, Wales and Northern
Ireland.
|
|
•
|
help
ensure that our network marketing system and products comply with all
applicable regulations;
|
|
•
|
help
establish favorable public relations in the new market by acting as an
intermediary between us and local regulatory authorities, public officials
and business people; and
|
|
•
|
explain
our products and product ingredients to appropriate regulators and, when
necessary, to arrange for local technicians to conduct required ingredient
analysis tests of the products.
|
Product
|
Patent Expiration Date
|
|
Innergize!
|
November
2012
|
|
FibRestore
|
June
2014
|
|
Cellebrate
|
June
2015
|
|
Arthaffect
|
March
2018
|
|
ReversAge
|
May
2021
|
Location
|
Nature of Use
|
Square Feet
|
Owned/Leased
|
||||
Chesterfield,
MO, USA
|
corporate
headquarters/call center/manufacturing/warehouse
|
126,000 |
Owned
|
||||
Seven
Hills (Sydney), Australia
|
central
office/ warehouse/distribution
|
8,900 |
Leased
|
||||
Oakville,
Ontario, Canada
|
warehouse/distribution
|
2,100 |
Leased
|
||||
Mexico
City, Mexico
|
central
office/ warehouse/distribution
|
28,000 |
Leased
|
||||
Makati
City (Manila), Philippines
|
central
office/ warehouse/distribution
|
3,900 |
Leased
|
||||
Birmingham,
England, UK
|
central
office/ warehouse/distribution
|
2,200 |
Leased
|
||||
Petaling
Jaya, Malaysia
|
central
office/call center warehouse/distribution
|
4,000 |
Leased
|
||||
Dietzenbach
(Frankfurt), Germany
|
warehouse/distribution
|
8,300 |
Leased
|
||||
Jakarta,
Indonesia
|
central
office/ warehouse/distribution
|
1,600 |
Leased
|
High
|
Low
|
Dividend
|
||||||||||
Year
Ending December 31, 2009
|
||||||||||||
Fourth
Quarter
|
$ | 3.75 | $ | 2.97 | $ | 0.02 | ||||||
Third
Quarter
|
4.12 | 2.85 | - | |||||||||
Second
Quarter
|
4.80 | 2.08 | 0.05 | |||||||||
First
Quarter
|
5.04 | 3.40 | - | |||||||||
Year
Ending December 31, 2008
|
||||||||||||
Fourth
Quarter
|
$ | 5.95 | $ | 3.85 | $ | 0.05 | ||||||
Third
Quarter
|
6.90 | 5.00 | - | |||||||||
Second
Quarter
|
7.47 | 5.45 | 0.05 | |||||||||
First
Quarter
|
8.75 | 6.03 | - |
2009
|
2008
|
|||||||
Net
sales
|
100.0 | % | 100.0 | % | ||||
Costs
and expenses:
|
||||||||
Cost
of products sold
|
19.7 | 17.8 | ||||||
Distributor
royalties and commissions
|
37.7 | 38.9 | ||||||
Selling,
general and administrative
|
38.1 | 37.5 | ||||||
Income
from operations
|
4.5 | 5.8 | ||||||
Interest
income
|
0.1 | 0.3 | ||||||
Interest
expense
|
(0.3 | ) | (0.0 | ) | ||||
Loss
on limited partnership investment
|
0.0 | (0.6 | ) | |||||
Other
income
|
0.4 | 0.0 | ||||||
Income
before income taxes
|
4.7 | 5.5 | ||||||
Provision
for income taxes
|
1.7 | 2.6 | ||||||
Net
income
|
3.0 | % | 2.9 | % |
Year
Ended December 31,
|
||||||||||||||||||||||||
2009
|
2008
|
Change
from prior year
|
||||||||||||||||||||||
Amount
|
% of Net
Sales
|
Amount
|
%
of Net
Sales
|
Amount
|
%
|
|||||||||||||||||||
(dollars
in thousands)
|
||||||||||||||||||||||||
United
States
|
$ | 75,041 | 87.9 | % | $ | 85,382 | 87.0 | % | $ | (10,341 | ) | (12.1 | )% | |||||||||||
Australia/New
Zealand
|
2,459 | 2.9 | 2,681 | 2.7 | (222 | ) | (8.3 | ) | ||||||||||||||||
Canada
|
1,548 | 1.8 | 1,660 | 1.7 | (112 | ) | (6.7 | ) | ||||||||||||||||
Mexico
|
1,371 | 1.6 | 1,543 | 1.6 | (172 | ) | (11.1 | ) | ||||||||||||||||
Europe
|
1,335 | 1.5 | 1,528 | 1.5 | (193 | ) | (12.6 | ) | ||||||||||||||||
Asia
|
3,645 | 4.3 | 5,401 | 5.5 | (1,756 | ) | (32.5 | ) | ||||||||||||||||
Consolidated
total
|
$ | 85,399 | 100.0 | % | $ | 98,195 | 100.0 | % | $ | (12,796 | ) | (13.0 | )% |
December 31, 2009
|
December 31, 2008
|
% Change
|
||||||||||||||||||||||
Active
Distributors
|
Master
Affiliates and
Above
|
Active
Distributors
|
Master
Affiliates and
Above
|
Active
Distributors
|
Master
Affiliates and
Above
|
|||||||||||||||||||
United
States
|
54,040 | 8,640 | 53,450 | 10,910 | 1.1 | % | (20.8 | )% | ||||||||||||||||
Australia/New
Zealand
|
2,540 | 210 | 2,390 | 240 | 6.3 | (12.5 | ) | |||||||||||||||||
Canada
|
1,170 | 140 | 1,260 | 170 | (7.1 | ) | (17.6 | ) | ||||||||||||||||
Mexico
|
2,200 | 260 | 1,480 | 240 | 48.6 | 8.3 | ||||||||||||||||||
Europe
|
1,150 | 180 | 1,100 | 200 | 4.5 | (10.0 | ) | |||||||||||||||||
Asia
|
6,840 | 720 | 7,660 | 1,040 | (10.7 | ) | (30.8 | ) | ||||||||||||||||
Consolidated
total
|
67,940 | 10,150 | 67,340 | 12,800 | 0.9 | % | (20.7 | )% |
(a) 1.
|
The
Consolidated Financial Statements filed as part of this report on Form
10-K are listed on the accompanying Index to Consolidated Financial
Statements and Consolidated Financial Statement
Schedules.
|
2.
|
Financial
schedules required to be filed by Item 8 of this form, and by Item 15(d)
below:
|
|
3.
|
Exhibits:
|
Number
|
Document
|
|
3.1
|
Second
Amended and Restated Certificate of Incorporation (incorporated by
reference to Appendix B of Schedule 14A of the Registrant filed on April
17, 2003).
|
|
3.2
|
By-Laws
(incorporated by reference to the Registration Statement on Form S-3 of
the Registrant filed on February 21, 2006).
|
|
3.3
|
Amendment
to By-Laws dated March 22, 2001 (incorporated by reference to the
Registration Statement on Form S-3 of the Registrant filed on February 21,
2006).
|
|
3.4
|
Certificate
of Designation to Create a Class of Series A Preferred Stock for Reliv’
International, Inc. (incorporated by reference to Exhibit 3.1 to the Form
10-Q of the Registrant for quarter ended March 31,
2003).
|
|
4.1
|
Form
of Reliv International, Inc. common stock certificate (incorporated by
reference to the Registration Statement on Form S-3 of the Registrant
filed on February 21, 2006).
|
|
10.1
|
Amended
Exclusive License Agreement with Theodore P. Kalogris dated December 1,
1991 (incorporated by reference to Exhibit 10.1 to the Form 10-K of the
Registrant for the year ended December 31, 1992).
|
|
10.2*
|
Robert
L. Montgomery Employment Agreement dated June 19, 2007 (incorporated by
reference to Exhibit 10.1 to the Form 8-K of the Registrant filed June 25,
2007).
|
|
10.3*
|
Carl
W. Hastings Employment Agreement dated July 26, 2007 (incorporated by
reference to Exhibit 10.1 to the Form 8-K of the Registrant filed July 27,
2007).
|
|
10.4
|
Letter
Agreement with Southwest Bank of St. Louis dated June 29, 2009
(incorporated by reference to Exhibit 10.1 to the Form 8-K of the
Registrant filed July 6, 2009).
|
|
10.5
|
Promissory
Note with Southwest Bank of St. Louis dated June 29, 2009 (incorporated by
reference to Exhibit 10.2 to the Form 8-K of the Registrant filed July 6,
2009).
|
|
10.6*
|
Reliv’
International, Inc. Supplemental Executive Retirement Plan dated June 1,
1998 (incorporated by reference to Exhibit 10.19 to the Form10-K of the
Registrant for year ended December 31, 1998).
|
|
10.7*
|
|
Reliv
International, Inc. Employee Stock Ownership Plan and Trust dated August
24, 2006 (incorporated by reference to Exhibit 10.1 to the Form 8-K of the
Registrant filed August 30, 2006).
|
10.8
|
Agreement
with Hydron Technologies, Inc. dated March 1, 2001 (incorporated by
reference to Exhibit 10.16 to the Form 10-K of the Registrant for year
ended December 31, 2001).
|
|
10.9*
|
Amended
and Restated Distributor Stock Purchase Plan (incorporated by reference to
Form S-8 Registration Statement the Registrant filed May 9,
2002).
|
|
10.10*
|
2003
Stock Option Plan (incorporated by reference to Form S-8 Registration
Statement the Registrant filed August 13, 2003).
|
|
10.11*
|
Reliv
International, Inc. Incentive Compensation Plan effective January 1, 2007
(incorporated by reference to Exhibit 10.1 to the Form 8-K of the
Registrant filed May 31,
2007).
|
10.12*
|
R.
Scott Montgomery Employment Agreement dated January 2, 2008 (incorporated
by reference to Exhibit 10.1 to the Form 8-K of the Registrant filed
January 4, 2008).
|
|
10.13*
|
Ryan
A. Montgomery Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.2 to the Form 8-K of the Registrant filed January
4, 2008).
|
|
10.14*
|
Steven
G. Hastings Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.3 to the Form 8-K of the Registrant filed January
4, 2008).
|
|
10.15*
|
Steven
D. Albright Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.4 to the Form 8-K of the Registrant filed January
4, 2008).
|
|
10.16*
|
Brett
M. Hastings Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.5 to the Form 8-K of the Registrant filed January
4, 2008).
|
|
10.17
|
Rule
10b5-1 Stock Repurchase Plan dated June 12, 2008 between the Registrant
and Canaccord Adams, Inc. (incorporated by reference to Exhibit 10.1 to
the Form 8-K of the Registrant filed June 13, 2008).
|
|
10.18
|
Stock
Purchase Agreement dated July 24, 2008 by and between the Paul and Jane
Meyer Family Foundation and Reliv International, Inc. (incorporated by
reference to Exhibit 10.1 to the Form 8-K of the Registrant filed July 30,
2008).
|
|
10.19
|
Stock
Purchase Agreement dated July 24, 2008 by and between Centre Island
Properties, Ltd. and Reliv International, Inc. (incorporated by reference
to Exhibit 10.2 to the Form 8-K of the Registrant filed July 30,
2008).
|
|
10.20
|
Standstill
Letter from Paul J. Meyer to Robert L. Montgomery dated July 25, 2008
(incorporated by reference to Exhibit 10.3 to the Form 8-K of the
Registrant filed July 30, 2008).
|
|
10.21
|
Stock
Purchase Agreement among the Paul and Jane Meyer Family Foundation and
Reliv International, Inc. dated April 23, 2009 (incorporated by reference
to Exhibit 10.1 to the Form 8-K of the Registrant filed April 28,
2009).
|
|
10.22
|
Purchase
Agreement by and among Michael G. Williams, Julie T. Williams and Reliv
International, Inc. dated August 31, 2009 (incorporated by reference to
Exhibit 10.1 to the Form 8-K of the Registrant filed September 3,
2009).
|
|
11
|
Statement
re: computation of per share earnings (incorporated by reference to Note 8
of the Consolidated Financial Statements contained in Part
IV).
|
|
21
|
Subsidiaries
of the Registrant (filed herewith).
|
|
23
|
Consent
of Ernst & Young LLP, Independent Auditors (filed
herewith).
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
of the Securities Exchange Act, as amended (filed
herewith).
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
of the Securities Exchange Act, as amended (filed
herewith).
|
|
32
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 (filed herewith).
|
RELIV’
INTERNATIONAL, INC.
|
|
By:
|
/s/
Robert L. Montgomery
|
Robert
L. Montgomery, Chairman of the Board of Directors, President and Chief
Executive Officer
|
|
Date:
March 12, 2010
|
|
Pursuant
to the requirements of the Securities Act of 1934, this report has been
signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
|
|
By:
|
/s/
Robert L. Montgomery
|
Robert
L. Montgomery, Chairman of the Board of Directors, President and Chief
Executive Officer
|
|
Date:
March 12, 2010
|
|
By:
|
/s/
Steven D. Albright
|
Steven
D. Albright, Chief Financial Officer (and accounting
officer)
|
|
Date:
|
March
12, 2010
|
By:
|
/s/
Carl W. Hastings
|
Carl
W. Hastings, Vice Chairman, Chief Scientific Officer,
Director
|
|
Date:
March 12, 2010
|
|
By:
|
/s/
Stephen M. Merrick
|
Stephen
M. Merrick, Senior Vice President, Secretary, Director
|
|
Date:
March 12, 2010
|
|
By:
|
/s/
Donald L. McCain
|
Donald
L. McCain, Director
|
|
Date:
March 12, 2010
|
|
By:
|
/s/
John B. Akin
|
John
B. Akin, Director
|
|
Date:
March 12, 2010
|
|
By:
|
/s/
Robert M. Henry
|
Robert
M. Henry, Director
|
|
Date:
March 12, 2010
|
|
By:
|
/s/
Denis St. John
|
Denis
St. John, Director
|
|
Date:
March 12,
2010
|
By:
|
/s/ Michael D. Smith
|
Michael
D. Smith, Director
|
|
Date:
March 12, 2010
|
Exhibit
|
||
Number
|
Document
|
|
3.1
|
Second
Amended and Restated Certificate of Incorporation (incorporated by
reference to Appendix B of Schedule 14A of the Registrant filed on April
17, 2003).
|
|
3.2
|
By-Laws
(incorporated by reference to the Registration Statement on Form S-3 of
the Registrant filed on February 21, 2006).
|
|
3.3
|
Amendment
to By-Laws dated March 22, 2001 (incorporated by reference to the
Registration Statement on Form S-3 of the Registrant filed on February 21,
2006).
|
|
3.4
|
Certificate
of Designation to Create a Class of Series A Preferred Stock for Reliv’
International, Inc. (incorporated by reference to Exhibit 3.1 to the Form
10-Q of the Registrant for quarter ended March 31,
2003).
|
|
4.1
|
Form
of Reliv International, Inc. common stock certificate (incorporated by
reference to the Registration Statement on Form S-3 of the Registrant
filed on February 21, 2006).
|
|
10.1
|
Amended
Exclusive License Agreement with Theodore P. Kalogris dated December 1,
1991 (incorporated by reference to Exhibit 10.1 to the Form 10-K of the
Registrant for the year ended December 31, 1992).
|
|
10.2*
|
Robert
L. Montgomery Employment Agreement dated June 19, 2007 (incorporated by
reference to Exhibit 10.1 to the Form 8-K of the Registrant filed June 25,
2007).
|
|
10.3*
|
Carl
W. Hastings Employment Agreement dated July 26, 2007 (incorporated by
reference to Exhibit 10.1 to the Form 8-K of the Registrant filed July 27,
2007).
|
|
10.4
|
Letter
Agreement with Southwest Bank of St. Louis dated June 29, 2009
(incorporated by reference to Exhibit 10.1 to the Form 8-K of the
Registrant filed July 6, 2009).
|
|
10.5
|
Promissory
Note with Southwest Bank of St. Louis dated June 29, 2009 (incorporated by
reference to Exhibit 10.2 to the Form 8-K of the Registrant filed July 6,
2009).
|
|
10.6*
|
Reliv’
International, Inc. Supplemental Executive Retirement Plan dated June 1,
1998 (incorporated
by reference to Exhibit 10.19 to the Form10-K of the Registrant for year
ended December 31, 1998).
|
|
10.7*
|
Reliv
International, Inc. Employee Stock Ownership Plan and Trust dated August
24, 2006 (incorporated by reference to Exhibit 10.1 to the Form 8-K of the
Registrant filed August 30, 2006).
|
|
10.8
|
Agreement
with Hydron Technologies, Inc. dated March 1, 2001 (incorporated by
reference to Exhibit 10.16 to the Form 10-K of the Registrant for year
ended December 31, 2001).
|
|
10.9*
|
Amended
and Restated Distributor Stock Purchase Plan (incorporated by reference to
Form S-8 Registration Statement the Registrant filed May 9,
2002).
|
10.10*
|
2003
Stock Option Plan (incorporated by reference to Form S-8 Registration
Statement the Registrant filed August 13, 2003).
|
|
10.11*
|
Reliv
International, Inc. Incentive Compensation Plan effective January 1, 2007
(incorporated by reference to Exhibit 10.1 to the Form 8-K of the
Registrant filed May 31, 2007).
|
|
10.12*
|
R.
Scott Montgomery Employment Agreement dated January 2, 2008 (incorporated
by reference to Exhibit 10.1 to the Form 8-K of the Registrant filed
January 4, 2008).
|
|
10.13*
|
Ryan
A. Montgomery Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.2 to the Form 8-K of the Registrant filed January
4, 2008).
|
|
10.14*
|
Steven
G. Hastings Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.3 to the Form 8-K of the Registrant filed January
4, 2008).
|
|
10.15*
|
Steven
D. Albright Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.4 to the Form 8-K of the Registrant filed January
4, 2008).
|
|
10.16*
|
Brett
M. Hastings Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.5 to the Form 8-K of the Registrant filed January
4, 2008).
|
|
10.17
|
Rule
10b5-1 Stock Repurchase Plan dated June 12, 2008 between the Registrant
and Canaccord Adams, Inc. (incorporated by reference to Exhibit 10.1 to
the Form 8-K of the Registrant filed June 13, 2008).
|
|
10.18
|
Stock
Purchase Agreement dated July 24, 2008 by and between the Paul and Jane
Meyer Family Foundation and Reliv International, Inc. (incorporated by
reference to Exhibit 10.1 to the Form 8-K of the Registrant filed July 30,
2008).
|
|
10.19
|
Stock
Purchase Agreement dated July 24, 2008 by and between Centre Island
Properties, Ltd. and Reliv International, Inc. (incorporated by reference
to Exhibit 10.2 to the Form 8-K of the Registrant filed July 30,
2008).
|
|
10.20
|
Standstill
Letter from Paul J. Meyer to Robert L. Montgomery dated July 25, 2008
(incorporated by reference to Exhibit 10.3 to the Form 8-K of the
Registrant filed July 30, 2008).
|
|
10.21
|
Stock
Purchase Agreement among the Paul and Jane Meyer Family Foundation and
Reliv International, Inc. dated April 23, 2009 (incorporated by reference
to Exhibit 10.1 to the Form 8-K of the Registrant filed April 28,
2009).
|
|
10.22
|
Purchase
Agreement by and among Michael G. Williams, Julie T. Williams and Reliv
International, Inc. dated August 31, 2009 (incorporated by reference to
Exhibit 10.1 to the Form 8-K of the Registrant filed September 3,
2009).
|
|
11
|
Statement
re: computation of per share earnings (incorporated by reference to Note 8
of the Consolidated Financial Statements contained in Part
IV).
|
|
21
|
Subsidiaries
of the Registrant (filed herewith).
|
|
23
|
Consent
of Ernst & Young LLP, Independent Auditors (filed
herewith).
|
|
31.1
|
Certification of
Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of
the Securities
Exchange Act, as amended (filed
herewith).
|
|
31.2
|
Certification of
Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of
the Securities
Exchange Act, as amended (filed
herewith).
|
32
|
Certification of
Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(filed
herewith).
|
Consolidated
Financial Statements:
|
||||
Report
of Independent Registered Public Accounting Firm
|
F-1 | |||
Consolidated
Balance Sheets as of December 31, 2009 and 2008
|
F-2 | |||
Consolidated
Statements of Income for the years ended December 31, 2009 and
2008
|
F-4 | |||
Consolidated
Statements of Stockholders’ Equity for the years ended December 31, 2009
and 2008
|
F-5 | |||
Consolidated
Statements of Cash Flows for the years ended December 31, 2009 and
2008
|
F-6 | |||
Notes
to Consolidated Financial Statements – December 31, 2009
|
F-8 |
/s/
Ernst & Young LLP
|
|
St.
Louis, Missouri
|
|
March
12, 2010
|
December 31
|
||||||||
2009
|
2008
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 5,760,913 | $ | 4,460,637 | ||||
Accounts
and notes receivable, less allowances of $59,700 in 2009 and $10,200 in
2008
|
326,022 | 494,689 | ||||||
Accounts
due from employees and distributors
|
78,500 | 241,532 | ||||||
Inventories:
|
||||||||
Finished
goods
|
3,073,570 | 3,533,371 | ||||||
Raw
materials
|
1,388,140 | 1,710,319 | ||||||
Sales
aids and promotional materials
|
622,694 | 978,264 | ||||||
Total
inventories
|
5,084,404 | 6,221,954 | ||||||
Refundable
income taxes
|
23,789 | 129,137 | ||||||
Prepaid
expenses and other current assets
|
652,544 | 1,525,665 | ||||||
Deferred
income taxes
|
303,000 | 522,000 | ||||||
Total
current assets
|
12,229,172 | 13,595,614 | ||||||
Other
assets
|
1,569,079 | 1,220,546 | ||||||
Accounts
due from employees and distributors
|
- | 164,462 | ||||||
Intangible
assets, net
|
1,991,497 | - | ||||||
Property,
plant, and equipment
|
18,629,377 | 18,288,571 | ||||||
Less
accumulated depreciation
|
10,264,692 | 9,376,414 | ||||||
8,364,685 | 8,912,157 | |||||||
Total
assets
|
$ | 24,154,433 | $ | 23,892,779 |
December 31
|
||||||||
2009
|
2008
|
|||||||
Liabilities
and stockholders’ equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$ | 6,242,289 | $ | 6,780,824 | ||||
Current
maturities of long-term debt
|
519,192 | 569,375 | ||||||
Total
current liabilities
|
6,761,481 | 7,350,199 | ||||||
Noncurrent
liabilities:
|
||||||||
Long-term
debt, less current maturities
|
4,719,542 | - | ||||||
Noncurrent
deferred income taxes
|
- | 70,000 | ||||||
Other
noncurrent liabilities
|
406,544 | 364,990 | ||||||
Total
noncurrent liabilities
|
5,126,086 | 434,990 | ||||||
Stockholders’
equity:
|
||||||||
Preferred
stock, par value $0.001 per share; 3,000,000 shares authorized; -0- shares
issued and outstanding in 2009 and 2008
|
- | - | ||||||
Common
stock, par value $0.001 per share; 30,000,000 shares authorized,
14,425,185 shares issued and 12,380,187 shares outstanding in 2009;
14,425,185 shares issued and 14,302,160 shares outstanding in
2008
|
14,425 | 14,425 | ||||||
Additional
paid-in capital
|
30,228,573 | 30,321,066 | ||||||
Accumulated
deficit
|
(11,279,526 | ) | (12,938,430 | ) | ||||
Accumulated
other comprehensive loss:
|
||||||||
Foreign
currency translation adjustment
|
(627,704 | ) | (663,478 | ) | ||||
Treasury
stock
|
(6,068,902 | ) | (625,993 | ) | ||||
Total
stockholders’ equity
|
12,266,866 | 16,107,590 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 24,154,433 | $ | 23,892,779 |
Year ended December 31
|
||||||||
2009
|
2008
|
|||||||
Product
sales
|
$ | 75,845,599 | $ | 87,348,915 | ||||
Handling
& freight income
|
9,553,471 | 10,845,903 | ||||||
Net
sales
|
85,399,070 | 98,194,818 | ||||||
Costs
and expenses:
|
||||||||
Cost
of products sold
|
16,862,622 | 17,437,133 | ||||||
Distributor
royalties and commissions
|
32,172,148 | 38,207,889 | ||||||
Selling,
general, and administrative
|
32,557,704 | 36,881,041 | ||||||
Income
from operations
|
3,806,596 | 5,668,755 | ||||||
Other
income (expense):
|
||||||||
Interest
income
|
52,292 | 328,057 | ||||||
Interest
expense
|
(173,867 | ) | (37,327 | ) | ||||
Loss
on limited partnership investment
|
- | (595,887 | ) | |||||
Other
income
|
300,260 | 30,353 | ||||||
Income
before income taxes
|
3,985,281 | 5,393,951 | ||||||
Provision
for income taxes
|
1,470,000 | 2,513,000 | ||||||
Net
income available to common
|
||||||||
shareholders
|
$ | 2,515,281 | $ | 2,880,951 | ||||
Earnings
per common share - Basic
|
$ | 0.20 | $ | 0.19 | ||||
Weighted
average shares
|
12,894,000 | 15,213,000 | ||||||
Earnings
per common share - Diluted
|
$ | 0.20 | $ | 0.19 | ||||
Weighted
average shares
|
12,894,000 | 15,223,000 |
Accumulated
|
||||||||||||||||||||||||||||||||
Additional
|
Other
|
|||||||||||||||||||||||||||||||
Common Stock
|
Paid-In
|
Accumulated
|
Comprehensive
|
Treasury Stock
|
||||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Loss
|
Shares
|
Amount
|
Total
|
|||||||||||||||||||||||||
Balance
at December 31, 2007
|
15,877,179 | $ | 15,877 | $ | 33,100,351 | $ | (8,869,332 | ) | $ | (419,179 | ) | 3,425 | $ | (22,516 | ) | $ | 23,805,201 | |||||||||||||||
Net
income
|
- | - | 2,880,951 | - | - | - | 2,880,951 | |||||||||||||||||||||||||
Other
comprehensive income:
|
||||||||||||||||||||||||||||||||
Foreign
currency translation adjustment
|
- | - | - | - | (244,299 | ) | - | - | (244,299 | ) | ||||||||||||||||||||||
Total
comprehensive income
|
2,636,652 | |||||||||||||||||||||||||||||||
Common
stock dividends paid, $0.10 per share
|
- | - | - | (1,514,016 | ) | - | - | - | (1,514,016 | ) | ||||||||||||||||||||||
Warrants
granted under DSPP
|
- | - | 92,229 | - | - | - | - | 92,229 | ||||||||||||||||||||||||
Stock-based
compensation
|
- | - | 185,635 | - | - | - | - | 185,635 | ||||||||||||||||||||||||
Contribution
of treasury shares to ESOP
|
- | - | (21,073 | ) | - | - | (53,500 | ) | 271,453 | 250,380 | ||||||||||||||||||||||
Common
stock purchased for treasury
|
- | - | - | - | - | 1,626,609 | (9,357,732 | ) | (9,357,732 | ) | ||||||||||||||||||||||
Retirement
of treasury stock
|
(1,453,509 | ) | (1,454 | ) | (3,045,315 | ) | (5,436,033 | ) | - | (1,453,509 | ) | 8,482,802 | - | |||||||||||||||||||
Options
and warrants exercised
|
1,515 | 2 | 6,967 | - | - | - | - | 6,969 | ||||||||||||||||||||||||
Other
|
- | - | 2,272 | - | - | - | - | 2,272 | ||||||||||||||||||||||||
Balance
at December 31, 2008
|
14,425,185 | 14,425 | 30,321,066 | (12,938,430 | ) | (663,478 | ) | 123,025 | (625,993 | ) | 16,107,590 | |||||||||||||||||||||
Net
income
|
- | - | - | 2,515,281 | - | - | - | 2,515,281 | ||||||||||||||||||||||||
Other
comprehensive income:
|
||||||||||||||||||||||||||||||||
Foreign
currency translation adjustment
|
- | - | - | - | 35,774 | - | - | 35,774 | ||||||||||||||||||||||||
Total
comprehensive income
|
2,551,055 | |||||||||||||||||||||||||||||||
Common
stock dividends paid, $0.07 per share
|
- | - | - | (856,377 | ) | - | - | - | (856,377 | ) | ||||||||||||||||||||||
Stock-based
compensation, net of excess tax benefits
|
- | - | 120,632 | - | - | - | - | 120,632 | ||||||||||||||||||||||||
Contribution
of treasury shares to ESOP
|
- | - | (213,125 | ) | - | - | (150,000 | ) | 678,125 | 465,000 | ||||||||||||||||||||||
Common
stock purchased for treasury
|
- | - | - | - | - | 2,071,973 | (6,121,034 | ) | (6,121,034 | ) | ||||||||||||||||||||||
Balance
at December 31, 2009
|
14,425,185 | $ | 14,425 | $ | 30,228,573 | $ | (11,279,526 | ) | $ | (627,704 | ) | 2,044,998 | $ | (6,068,902 | ) | $ | 12,266,866 |
Year ended December 31
|
||||||||
2009
|
2008
|
|||||||
Operating
activities
|
||||||||
Net
income
|
$ | 2,515,281 | $ | 2,880,951 | ||||
Adjustments
to reconcile net income to net
|
||||||||
cash
provided by operating activities:
|
||||||||
Depreciation
and amortization
|
1,192,948 | 1,200,892 | ||||||
Stock-based
compensation
|
120,632 | 277,864 | ||||||
Contribution
of treasury shares to ESOP
|
465,000 | 250,380 | ||||||
Loss
on limited partnership investment
|
- | 595,887 | ||||||
Deferred
income taxes
|
52,000 | 140,430 | ||||||
Foreign
currency transaction (gain)/loss
|
(147,606 | ) | 72,434 | |||||
(Increase)
decrease in accounts and notes receivable
|
505,788 | 376,277 | ||||||
(Increase)
decrease in inventories
|
1,237,953 | (231,833 | ) | |||||
(Increase)
decrease in refundable income taxes
|
107,269 | 233,431 | ||||||
(Increase)
decrease in prepaid expenses and other
|
||||||||
current
assets
|
349,214 | (210,161 | ) | |||||
(Increase)
decrease in other assets
|
(288,027 | ) | 640,411 | |||||
Increase
(decrease) in accounts payable & accrued
|
||||||||
expenses
and other non-current liabilities
|
(603,771 | ) | (2,370,437 | ) | ||||
Increase
(decrease) in income taxes payable
|
- | (110,000 | ) | |||||
Net
cash provided by operating activities
|
5,506,681 | 3,746,526 | ||||||
Investing
activities
|
||||||||
Proceeds
from sale of property, plant, and equipment
|
3,978 | 28,445 | ||||||
Purchase
of property, plant, and equipment
|
(537,617 | ) | (929,874 | ) | ||||
Purchase
of distributorship
|
(716,119 | ) | - | |||||
Purchase
of investments
|
- | (1,521,111 | ) | |||||
Proceeds
from final withdrawal from limited partnership investment
|
488,633 | - | ||||||
Proceeds
from sales or maturities of investments, at cost
|
- | 1,919,703 | ||||||
Net
cash used in investing activities
|
(761,125 | ) | (502,837 | ) | ||||
Financing
activities
|
||||||||
Proceeds
from line of credit borrowings
|
6,000,000 | 4,000,000 | ||||||
Repayment
of line of credit borrowings
|
(6,000,000 | ) | (4,000,000 | ) | ||||
Proceeds
from term loan borrowings
|
4,120,000 | - | ||||||
Principal
payments on short and long-term borrowings
|
(1,901,442 | ) | - | |||||
Common
stock dividends paid
|
(856,377 | ) | (1,514,016 | ) | ||||
Proceeds
from options and warrants exercised
|
- | 6,969 | ||||||
Purchase
of stock for treasury
|
(5,014,115 | ) | (8,788,357 | ) | ||||
Other
|
- | 2,272 | ||||||
Net
cash used in financing activities
|
(3,651,934 | ) | (10,293,132 | ) | ||||
Effect
of exchange rate changes on cash and cash
|
||||||||
equivalents
|
206,654 | (184,619 | ) | |||||
Increase
(decrease) in cash and cash equivalents
|
1,300,276 | (7,234,062 | ) | |||||
Cash
and cash equivalents at beginning of year
|
4,460,637 | 11,694,699 | ||||||
Cash
and cash equivalents at end of year
|
$ | 5,760,913 | $ | 4,460,637 |
Year ended December 31
|
||||||||
2009
|
2008
|
|||||||
Supplemental
disclosures of cash flow information:
|
||||||||
Cash
paid during the year for:
|
||||||||
Interest
|
$ | 177,200 | $ | 33,171 | ||||
Income
taxes
|
$ | 1,378,000 | $ | 2,143,000 | ||||
Noncash
investing and financing transactions:
|
||||||||
Issuance
of promissory notes for purchase
|
||||||||
of
stock for treasury
|
$ | 1,106,919 | $ | 569,375 | ||||
Obligation
for purchase of distributorship
|
$ | 1,343,881 | $ | - |
2009
|
2008
|
|||||||
Land
and land improvements
|
$ | 852,147 | $ | 852,147 | ||||
Building
|
9,851,829 | 9,786,037 | ||||||
Machinery
and equipment
|
3,426,720 | 3,293,526 | ||||||
Office
equipment
|
1,494,915 | 1,452,015 | ||||||
Computer
equipment and software
|
3,003,766 | 2,904,846 | ||||||
18,629,377 | 18,288,571 | |||||||
Less
accumulated depreciation
|
10,264,692 | 9,376,414 | ||||||
$ | 8,364,685 | $ | 8,912,157 |
2009
|
2008
|
|||||||
Trade
payables
|
$ | 2,627,674 | $ | 2,948,467 | ||||
Distributors'
commissions
|
2,674,247 | 2,809,164 | ||||||
Sales
taxes
|
362,612 | 374,643 | ||||||
Payroll
and payroll taxes
|
577,756 | 648,550 | ||||||
$ | 6,242,289 | $ | 6,780,824 |
Fair
|
||||||||||||||||
Description
|
Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
December 31, 2009
|
||||||||||||||||
Long-term
debt
|
$ | 5,184,000 | - | $ | 5,184,000 | - | ||||||||||
Marketable
securities (1)
|
200,000 | $ | 200,000 | - | - | |||||||||||
December 31, 2008
|
||||||||||||||||
Marketable
securities (1)
|
155,000 | 155,000 | - | - |
(1)
|
Representing
assets of the Company's Supplemental Executive Retirement Plan
(trading
securities). Presented within Other Assets in the consolidated balance
sheets.
|
Level
1:
|
Observable
inputs such as quoted prices (unadjusted) in active markets for identical
assets or liabilities.
|
Level
2:
|
Inputs
other than quoted prices that are observable for the asset or liability,
either directly or indirectly. These include quoted prices for
similar assets or liabilities in active markets or similar assets or
liabilities in markets that are not
active.
|
Level
3:
|
Unobservable
inputs that reflect the reporting entity’s own
assumptions.
|
2009
|
2008
|
|||||||||||||||
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||||||
Long-term
debt
|
$ | 5,238,734 | $ | 5,184,000 | $ | - | $ | - | ||||||||
Marketable
securities
|
200,000 | 200,000 | 155,000 | 155,000 | ||||||||||||
Notes
payable
|
- | - | 569,375 | 569,375 |
2009
|
2008
|
|||||||
Term
loan
|
$ | 3,948,768 | $ | - | ||||
Series
of five notes issued from October 2008 through December 2008 for purchase
of treasury stock
|
- | 569,375 | ||||||
Obligation
for purchase of distributorship
|
1,289,966 | - | ||||||
5,238,734 | 569,375 | |||||||
Less
current maturities
|
519,192 | 569,375 | ||||||
$ | 4,719,542 | $ | - |
2010
|
$ | 519,192 | ||
2011
|
3,772,593 | |||
2012
|
184,781 | |||
2013
|
194,234 | |||
2014
|
204,172 | |||
Thereafter
|
363,762 | |||
$ | 5,238,734 |
2009
|
2008
|
|||||||||||||||
Options
|
Weighted
Avg.
Exercise
Price
|
Options
|
Weighted
Avg.
Exercise
Price
|
|||||||||||||
Outstanding
beginning of the year
|
763,000 | $ | 8.31 | 725,500 | $ | 8.48 | ||||||||||
Granted
|
- | 41,500 | 5.41 | |||||||||||||
Exercised
|
- | - | ||||||||||||||
Forfeited
|
(9,000 | ) | 9.74 | (4,000 | ) | 9.74 | ||||||||||
Outstanding
at end of year
|
754,000 | $ | 8.29 | 763,000 | $ | 8.31 | ||||||||||
Exercisable
at end of year
|
576,875 | $ | 8.06 | 515,000 | $ | 7.96 |
As of December 31, 2009
|
||||||||||||||||||||||||
Options Outstanding
|
Options Exercisable
|
|||||||||||||||||||||||
Range of
Exercise Prices
|
Number
Outstanding
|
Weighted Avg.
Remaining Life
|
Weighted Avg.
Exercise Price
|
Number
Exercisable
|
Weighted Avg.
Remaining Life
|
Weighted Avg.
Exercise Price
|
||||||||||||||||||
$5.28
- $5.50
|
41,500 | 3.67 | $ | 5.41 | 12,500 | 3.67 | $ | 5.50 | ||||||||||||||||
$7.92
|
485,000 | 5.00 | 7.92 | 485,000 | 5.00 | 7.92 | ||||||||||||||||||
$8.68
|
30,000 | 5.79 | 8.68 | 30,000 | 5.79 | 8.68 | ||||||||||||||||||
$9.74
|
197,500 | 2.58 | 9.74 | 49,375 | 2.58 | 9.74 | ||||||||||||||||||
$5.28
- $9.74
|
754,000 | 4.33 | $ | 8.29 | 576,875 | 4.81 | $ | 8.06 |
Year ended December 31
|
||||||||
2009
|
2008
|
|||||||
Expected
warrant life (years)
|
2.5 | 2.5 | ||||||
Risk-free
weighted average interest rate
|
1.70 | % | 1.20 | % | ||||
Stock
price volatility
|
0.540 | 0.502 | ||||||
Dividend
yield
|
1.2 | % | 2.2 | % |
2009
|
2008
|
|||||||||||||||
Warrants
|
Weighted
Avg.
Exercise
Price
|
Warrants
|
Weighted
Avg.
Exercise
Price
|
|||||||||||||
Outstanding
beginning of the year
|
79,040 | $ | 7.25 | 79,724 | $ | 9.95 | ||||||||||
Granted
|
3,179 | 3.28 | 26,134 | 4.60 | ||||||||||||
Exercised
|
- | (1,515 | ) | 4.60 | ||||||||||||
Expired
and forfeited
|
(28,530 | ) | 8.68 | (25,303 | ) | 13.18 | ||||||||||
Outstanding
at end of year
|
53,689 | $ | 6.25 | 79,040 | $ | 7.25 | ||||||||||
Exercisable
at end of year
|
53,689 | 79,040 |
As of December 31, 2009
|
||||||||||||||||||||
Warrants Outstanding
|
Warrants Exercisable
|
|||||||||||||||||||
Range of
Exercise Prices
|
Number
Outstanding
|
Weighted Avg.
Remaining Life
|
Weighted Avg.
Exercise Price
|
Number
Exercisable
|
Weighted Avg.
Exercise Price
|
|||||||||||||||
$ 3.28
|
3,179 | 3.00 | $ | 3.28 | 3,179 | $ | 3.28 | |||||||||||||
$ 4.60
|
24,619 | 1.88 | 4.60 | 24,619 | 4.60 | |||||||||||||||
$ 8.19
|
25,891 | 1.00 | 8.19 | 25,891 | 8.19 | |||||||||||||||
$3.28
- $8.19
|
53,689 | 1.52 | $ | 6.25 | 53,689 | $ | 6.25 |
Year ended December 31
|
||||||||
2009
|
2008
|
|||||||
Stock
Warrants Exercised:
|
||||||||
Intrinsic
value
|
$ | - | $ | 1,000 | ||||
Actual
tax benefit realized
|
- | - | ||||||
Cash
received
|
- | 7,000 |
Year ended December 31
|
||||||||
2009
|
2008
|
|||||||
Numerator:
|
||||||||
Net
income
|
$ | 2,515,281 | $ | 2,880,951 | ||||
Denominator:
|
||||||||
Denominator
for basic earnings per share – weighted average shares
|
12,894,000 | 15,213,000 | ||||||
Dilutive
effect of employee stock options and other warrants
|
- | 10,000 | ||||||
Denominator
for diluted earnings per share – adjusted weighted average
shares
|
12,894,000 | 15,223,000 | ||||||
Basic
earnings per share
|
$ | 0.20 | $ | 0.19 | ||||
Diluted
earnings per share
|
$ | 0.20 | $ | 0.19 |
2010
|
$ | 436,276 | ||
2011
|
350,810 | |||
2012
|
216,148 | |||
2013
|
121,542 | |||
2014
|
111,993 | |||
Thereafter
|
50,159 | |||
$ | 1,286,928 |
Year ended December 31
|
||||||||
2009
|
2008
|
|||||||
United
States
|
$ | 5,828,091 | $ | 7,946,609 | ||||
Foreign
|
(1,842,810 | ) | (2,552,658 | ) | ||||
$ | 3,985,281 | $ | 5,393,951 |
Year ended December 31
|
||||||||
2009
|
2008
|
|||||||
Current:
|
||||||||
Federal
|
$ | 1,236,000 | $ | 2,010,000 | ||||
State
|
185,000 | 313,000 | ||||||
Foreign
|
33,000 | 11,000 | ||||||
Total
current
|
1,454,000 | 2,334,000 | ||||||
Deferred:
|
||||||||
Federal
|
14,000 | 112,000 | ||||||
State
|
2,000 | 18,000 | ||||||
Foreign
|
- | 49,000 | ||||||
Total
deferred
|
16,000 | 179,000 | ||||||
$ | 1,470,000 | $ | 2,513,000 |
Year ended December 31
|
||||||||
2009
|
2008
|
|||||||
Income
taxes at U.S. statutory rate
|
$ | 1,355,000 | $ | 1,834,000 | ||||
State
income taxes, net of federal benefit
|
204,000 | 348,000 | ||||||
Lower
effective taxes on earnings in other countries
|
(13,000 | ) | (20,000 | ) | ||||
Foreign
corporate income taxes
|
33,000 | 60,000 | ||||||
Executive
life insurance expense
|
- | 9,000 | ||||||
Nondeductible
meals and entertainment expense
|
35,000 | 46,000 | ||||||
Qualified
production activities income - American Jobs Creation Act
|
(44,000 | ) | (73,000 | ) | ||||
Deferred
tax asset valuation allowance - investment losses
|
- | 343,000 | ||||||
Other
|
(100,000 | ) | (34,000 | ) | ||||
$ | 1,470,000 | $ | 2,513,000 |
2009
|
2008
|
|||||||
Deferred
tax assets:
|
||||||||
Product
refund reserve
|
$ | 92,000 | $ | 143,000 | ||||
Inventory
obsolescence reserve
|
12,000 | 18,000 | ||||||
Vacation
accrual
|
29,000 | 28,000 | ||||||
Stock-based
compensation
|
189,000 | 154,000 | ||||||
Organization
costs
|
91,000 | 146,000 | ||||||
Deferred
compensation
|
64,000 | 50,000 | ||||||
Capital
losses on investments
|
343,000 | 446,000 | ||||||
Valuation
allowance - investment losses
|
(343,000 | ) | (396,000 | ) | ||||
Miscellaneous
accrued expenses
|
52,000 | 71,000 | ||||||
Foreign
net operating loss carryforwards
|
3,935,000 | 4,066,000 | ||||||
Valuation
allowance - NOL carryforwards
|
(3,935,000 | ) | (4,066,000 | ) | ||||
529,000 | 660,000 | |||||||
Deferred
tax liabilities:
|
||||||||
Depreciation
|
129,000 | 208,000 | ||||||
Net
deferred tax assets (liabilities)
|
$ | 400,000 | $ | 452,000 | ||||
Reported
as:
|
||||||||
Current
deferred tax assets
|
$ | 303,000 | $ | 522,000 | ||||
Non-current
deferred tax assets (1)
|
97,000 | - | ||||||
Non-current
deferred tax liabilities
|
- | 70,000 | ||||||
Net
deferred tax assets (liabilities)
|
$ | 400,000 | $ | 452,000 |
(1)
|
Included
within other non-current assets on the consolidated balance
sheets.
|
Beginning
balance as of January 1, 2008
|
$ | 220,500 | ||
Settlements
and effective settlements with tax authorities
|
(90,100 | ) | ||
Lapse
of statute of limitations
|
- | |||
Increases
in balances related to tax positions taken during prior
periods
|
43,800 | |||
Decreases
in balances related to tax positions taken during prior
periods
|
(36,500 | ) | ||
Increases
in balances related to tax positions taken during current
period
|
22,500 | |||
Balance
as of December 31, 2008
|
$ | 160,200 | ||
Settlements
and effective settlements with tax authorities
|
(1,400 | ) | ||
Lapse
of statute of limitations
|
- | |||
Increases
in balances related to tax positions taken during prior
periods
|
- | |||
Decreases
in balances related to tax positions taken during prior
periods
|
(15,000 | ) | ||
Increases
in balances related to tax positions taken during current
period
|
23,000 | |||
Balance
as of December 31, 2009
|
$ | 166,800 |
Employee
|
Lease
|
|||||||||||
Severance
|
Exit
|
Total
|
||||||||||
Original
charges and reserve balance
|
$ | 107,000 | $ | 108,000 | $ | 215,000 | ||||||
Additional
charges in 2008
|
17,500 | - | 17,500 | |||||||||
Amounts
settled in 2008
|
(124,500 | ) | (42,000 | ) | (166,500 | ) | ||||||
Reserve
balance at December 31, 2008
|
- | 66,000 | 66,000 | |||||||||
Amounts
settled in 1st quarter 2009
|
- | (13,000 | ) | (13,000 | ) | |||||||
Reserve
balance at March 31, 2009
|
- | 53,000 | 53,000 | |||||||||
Amounts
settled and sublease income adjustment in second quarter
2009
|
- | (20,000 | ) | (20,000 | ) | |||||||
Reserve
balance at June 30, 2009
|
- | 33,000 | 33,000 | |||||||||
Amounts
settled in 3rd quarter 2009
|
- | (7,000 | ) | (7,000 | ) | |||||||
Reserve
balance at September 30, 2009
|
- | 26,000 | 26,000 | |||||||||
Amounts
settled in 4th quarter 2009
|
- | (9,000 | ) | (9,000 | ) | |||||||
Reserve
balance at December 31, 2009
|
$ | - | $ | 17,000 | $ | 17,000 |
Accumulated
|
||||||||||||||||
Gross Carrying Amount
|
Amortization
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Distributorship
|
$ | 1,648,000 | - | $ | 36,622 | - | ||||||||||
Non-compete
agreement
|
103,000 | - | 17,167 | - | ||||||||||||
Non-solicitation
agreement
|
309,000 | - | 14,714 | - | ||||||||||||
$ | 2,060,000 | - | $ | 68,503 | - |
Intangible
|
||||
Amortization
|
||||
2010
|
$ | 205,500 | ||
2011
|
188,300 | |||
2012
|
154,000 | |||
2013
|
154,000 | |||
2014
|
154,000 |
2009
|
2008
|
|||||||
Net
sales to external customers
|
||||||||
United
States
|
$ | 75,041,461 | $ | 85,382,045 | ||||
Australia/New
Zealand
|
2,458,834 | 2,680,540 | ||||||
Canada
|
1,548,086 | 1,660,207 | ||||||
Mexico
|
1,371,127 | 1,542,567 | ||||||
Europe (1)
|
1,334,908 | 1,528,385 | ||||||
Asia (2)
|
3,644,654 | 5,401,074 | ||||||
Total
net sales
|
$ | 85,399,070 | $ | 98,194,818 | ||||
Assets
by area
|
||||||||
United
States
|
$ | 20,004,454 | $ | 20,136,254 | ||||
Australia/New
Zealand
|
796,189 | 485,377 | ||||||
Canada
|
257,825 | 238,379 | ||||||
Mexico
|
681,285 | 648,009 | ||||||
Europe (1)
|
466,152 | 473,240 | ||||||
Asia (2)
|
1,948,528 | 1,911,520 | ||||||
Total
consolidated assets
|
$ | 24,154,433 | $ | 23,892,779 |
(1)
|
Europe
consists of United Kingdom, Ireland, Germany, Austria, and the
Netherlands.
|
(2)
|
Asia
consists of Philippines, Malaysia, Singapore, Brunei, and
Indonesia.
|
2009
|
2008
|
|||||||
Net
sales by product category
|
||||||||
Nutritional
and dietary supplements
|
$ | 72,556,665 | $ | 84,156,989 | ||||
Skin
care products
|
984,985 | 995,636 | ||||||
Sales
aids and other
|
2,303,949 | 2,196,290 | ||||||
Handling
& freight income
|
9,553,471 | 10,845,903 | ||||||
Total
net sales
|
$ | 85,399,070 | $ | 98,194,818 |